Google Inc. and MPEG LA, LLC announced today that they have entered into agreements granting Google a license to techniques that may be essential to VP8 and earlier-generation VPx video compression technologies under patents owned by 11 patent holders. The agreements also grant Google the right to sublicense those techniques to any user of VP8, whether the VP8 implementation is by Google or another entity. It further provides for sublicensing those VP8 techniques in one next-generation VPx video codec. As a result of the agreements, MPEG LA will discontinue its effort to form a VP8 patent pool.

Good news, but not the end of the story. Even though MPEG-LA had licensed technologies to Google, the big question was under what terms. Making VP8 available to users of free software was potentially a problem, since it is not possible in general for patented technologies to be licensed for use with open source programs: no per-copy fee can be charged, and necessary permissions must automatically be passed on with any copy that is made. In other words, for free software, licenses need to be not just royalty-free, but restriction-free. The concern was that the deal agreed between Google and MPEG-LA would preclude that.

Indeed, when Google finally published the draft version of its VP8 Patent Cross-license Agreement, some in the free and open source (FOSS) world found unusual elements that raised questions about its compatibility with standard FOSS licenses. This has prompted the Software Freedom Law Center -- one of the key points of reference for legal matters in the world of free software -- to offer the following comments addressing those concerns:

Critics focus on two provisions in particular: §2, which requires would-be licensees to explicitly accept the license terms, and §3, which limits the license's "field of use" to implementations of VP8. Both would be unacceptable in a FOSS copyright license on software, but in the context of this particular free-standing third-party patent license, neither provision interferes with FOSS licensing or the freedoms it protects.

Should the developers of a FOSS VP8 implementation accept this license, they would not be required to pass on any restrictions limiting users' rights to copy, modify, and redistribute free programs. Users would be neither required to accept the patent license nor restricted from adding new capabilities to the software. They would have the same rights as they would if the developers had never accepted the patent license: those granted by the software's FOSS license.

If this patent license interfered with the freedoms guaranteed to users by FOSS licenses, it would be incompatible with the OSD [OPen Software Definition] and FSD [Free Software Definition]. Because the patent license does not restrict those freedoms, but rather affords some new, limited protections to users and developers within the field of use, it improves on the current situation. Without this license, the patent holders would be in a position to threaten those users and developers as well as others.

Of course, that underlines that the real problem here is that holders of even vaguely-relevant patents might band together to threaten to sue the creators and users of new codecs, and thus act as a brake on innovation. Although the proposed Google license is a clever hack around that, what we really we need is a thoroughgoing revision of the system that allows such anti-competitive patent pools to be created at all.

from the monopolies dept

This is quite a surprise. We'd already covered how MPEG-LA, the private company that has set up patent pools around web video, had announced its intention to set up a patent pool focused on the patents that holders believe are infringed upon by Google's VP8/WebM video standard. This definitely seemed like a typical shakedown situation, with one company basically asking a bunch of others to team up to demand a bunch of cash from Google.

What's surprising, however, is that the US Justice Department is apparently jumping into this particular battle, and investigating if MPEG-LA's response violates antitrust law. Apparently, the Justice Department (which is not exactly known as being a Google supporter...) is questioning whether or not this move by MPEG-LA and its members represents an attempt to stifle competition in the marketplace. Of course, the answer seems to be yes, but part of that is the very nature of patents. They are, by definition, a monopoly right. So if they want to stop monopoly abuse from stifling competition, perhaps the government should stop handing out so many monopolies.

from the we-must-find-some-patents! dept

Right after Google announced that it was "freeing" up its VP8 video codec under the WebM name, in an effort to get away from the heavily patented H.264 standard, MPEG-LA, the private company that manages the H.264 patent pool and has done some patent trolling at times, announced that it was planning to set up a patent pool around VP8 insisting that it simply wasn't possible that there could be a web video standard that wasn't patented (and wasn't paying MPEG-LA, I guess).

That was back in May, and it's taken until February, but MPEG-LA has officially put out a call for patents that cover VP8. That's a pretty clear declaration of war. It's also fairly obnoxious. What sort of organization blatantly says "Company X has released a cool technology to the world, and we're going to find any and all patents that will destroy that?" What an incredibly anti-innovation stance.

That said, I do wonder why it took so long between announcing the original plans and making this call. Perhaps it's discovered that it wasn't quite as easy as they had hoped to find patents that cover VP8. For its part, Google insists it's committed to fighting to keep V8 patent-free, and hopefully it stands by that commitment.

from the this-could-be-interesting... dept

It's no secret (though certain copyright and patent system defenders insist otherwise) that copyrights and patents are monopoly privileges, granted by the government. In fact, some of our elected officials have made the argument that antitrust law should be used against the worst abuses of intellectual property law. While it's unclear how successfully that will play in courts, we may soon have a bit of a test case. Slashdot points us to the news that German company Nero AG is suing MPEG-LA, claiming abuse of monopoly power with its patent pools for licensing digital video codecs.

As you may recall, MPEG-LA acts as a patent pool for many important patents related to digital video -- to the point that the organization appears to believe it is not possible to do digital video without infringing on those patents. Recently, the company has been getting more aggressive, first starting up a separate patent trolling subsidiary, and also threatening Google and others for trying to set up a new open video standard.

In this particular case, the details are important. OS News notes that MPEG-LA had approached the Justice Department back in the 90s to get an "all clear" against any antitrust problems, which the DoJ gave with some conditions. Nero suggests those conditions have not been met:

First, the MPEG-LA would engage with independent experts to ensure only essential patents would be placed in the MPEG-2 pool. They told the DOJ that the MPEG-2 pool constituted of 53 essential patents. Second, independent experts would "weed out nonessential patents" from the pool. Third, licensing terms would be "fair, reasonable, and nondiscriminatory".

Nero claims none of these safeguards were honoured, and here's where it gets juicy; "absolute power has corrupted the MPEG-LA absolutely", according to Nero. First of all, the so-called independent expert was anything but independent. The expert helped form the MPEG-LA, helped in drafting the first MPEG-LA licensing agreements, answers questions from licensees on behalf of the MPEG-LA, has attended business settlement meetings on behalf of the MPEG-LA, and has testified before US congress on behalf of the MPEG-LA. Heck, he is listed on the MPEG-LA website as "MPEG-LA's US patent counsel".

Nero also claims that the MPEG-LA has unlawfully extended its patent pools by adding non-essential patents to the MPEG-2 patent pool. Even though the MPEG-LA told the DOJ there were only 53 essential MPEG-2 patents, the non-independent expert added round and about 800 more patents to the pool, extending the duration of the patent pool, since the old, 53 essential patents expired....

Nero further claims that the MPEG-LA has "formulated and imposed licensing terms that are unfair, unreasonable, and discriminatory", by charging different royalty rates from licensees for the same MPEG-2 license and by not making any downward adjustment in line with the "rapid and dramatic" decrease in costs of implementing the MPEG-2 standard. In addition, the MPEG-LA collects royalties for the same device multiple times (internal hardware, software, monitor, etc.), and the licensing body has failed to "communicate its policies equally to all licensees".

MPEG-LA has responded to the lawsuit by basically accusing Nero of being an infringer with sour grapes. Now let's see what the courts think...

from the get-the-lawyers-ready dept

It's no secret that MPEG-LA, the private company that handles patent pools for a variety of digital video standards, including the widely used H.264 -- and recently began dabbling in patent trolling, has suggested that there can be no digital video without licensing patents from its patent pools. And, of course, there were just rumors (kicked off by a Steve Jobs email), that MPEG-LA was gearing up to sue any "open" video standard out of existence. Well, that whole story got a bit more complex this week when Google announced its plans to open up its VP8 video codec, and make it royalty free, under the WebM name.

Of course, you didn't think that MPEG-LA would take that calmly, did you? MPEG-LA's boss claims he's working to create a patent pool around VP8... meaning that what Google insists is now royalty free, might not end up being royalty free if MPEG-LA has its way. Of course, the good news here is that you now have Google's cash around to back up any potential patent fight, but it may take years (and years and years) before any resolution comes of it. And, in the end, for MPEG-LA, that might be the real goal. If it can just create enough uncertainty around VP8 through patent threats and lawsuits (even if it loses), it might hope that it can retain its hold on the market with H.264.

from the questions-worth-asking dept

Joe Mullin has a great blog post, looking in detail at MobileMedia, a recently launched "company" that fits all the traditional characteristics of a "patent troll" or "non-practicing entity" (if you'd prefer). It doesn't appear to do anything but hold patents, demand licensing fees and sue. So what's so interesting about this one? Well, it's a subsidiary of MPEG-LA, the company that manages some important digital video standards, and manages the patent pools related to them -- and both companies have the same CEO. In some cases, it seems like there's a clear conflict here:

Even more unusual is that one of the companies targeted in MobileMedia's initial batch of suits is Apple (the others were BlackBerry maker Research in Motion and HTC). Apple happens to be among the companies that has contributed patents to MPEG-LA patent pools, including those covering the MPEG-4 and the IEEE 1394 (Firewire) standards. That puts Horn in the position of collecting money for Apple on behalf of MPEG-LA while at the same time trying to wring money out of the company on behalf of MobileMedia. Considering the breadth of MobileMedia's patent claims--the company claims to hold patents relating to all the central functions of "call handling, speed dial functions, database searches, audio download and playback, and still picture and video processing"--it's easy to imagine that Apple won't be the last company to wind up on both sides of Larry Horn.

While some may claim that MPEG-LA and MobileMedia are basically in the same business, Mullin notes the important distinctions:

But there are big differences between the MPEG-LA licensing operation and the nascent MobileMedia campaign. First of all, MPEG-LA's patent pools are widely recognized as vital to digital video technology throughout the industry. And they're accepted as covering industry standards. MobileMedia, on the other hand, holds patents that cover phone features but not industry standards.

Second, MPEG-LA's licensing rates are relatively low--$2.50 per device for those that want to make a DVD player using MPEG-2 standards, for example, down from $4 back in 2002. And the pool is controlled by a large group of competitors with a shared incentive to keep those rates low (lower licensing costs means more devices made means more revenue for pool contributors).

Finally, MPEG-LA doesn't file enforcement lawsuits on its own. If a user of the MPEG-2 standard, for example, refuses to pay to license patents from the company's pools, MPEG-LA notifies the patent-holders that they may want to file suit. MPEG-LA simply plays an administrative role.

By contrast, MobileMedia owns its 122 U.S. patents (and related foreign patents) outright, and so can enforce them directly. And its majority owner is a pure patent-licensing company that doesn't make products. That gives it an incentive structure more like those of typical "non-practicing entities"--also known as "patent trolls"--that use the threat of litigation to collect settlement cash without concern for the actual market in question.

Mullin has much more detail in the article, including some quotes from the CEO, and also some more details on the patents in question -- including the fact that they came from Nokia and Sony, opening up more questions about why MobileMedia targeted Apple, RIM and HTC in its early lawsuits.

What I find interesting, of course, is that many patent system folks have said that patent pools are the "answer" to issues like non-practicing entities filing crazy lawsuits. And yet, here we have an example of one of the major patent pooling administrators apparently deciding it's more lucrative to get into the other side of the business instead...

In the meantime, while all this has been going on, it's worth noting that Steve Jobs -- one of the targets in this lawsuit -- has apparently been telling people that MPEG-LA is getting ready to sue open video codecs, such as Theora, for patent infringement. Of course, such threats have been made before and never carried out -- but if MPEG-LA now thinks that suing for patent infringement (rather than just alerting the patent holders to possible infringement) is the way to go these days, perhaps the lawsuits above were an opening salvo.

On top of that, a whole bunch of you have been submitting this somewhat speculative story that notes that MPEG-LA has structured its licensing program in such a way that pretty much any video camera you buy -- even the so-called "professional" ones -- includes a clause saying that it's only for "personal and non-commercial use," because MPEG-LA's licensing terms for anything else are ridiculously high. It appears that this clause has been almost universally ignored by... well... pretty much everyone. But if MPEG-LA is suddenly moving into more questionable means of bringing in revenue... it could get more troubling quickly.